Home rates finally show a break

It has been almost two weeks since the mortgage bailout plan was signed into law. The initial bond market was extremely positive once the initial details came out. The market response since then has not been good.

The stock market and the bond market showed consistent drops over several days. This was duplicated in the global markets. So much so that the Treasury held emergency forced meeting with major US bankers to announce a change of focus for the bailout from purchasing defaulted mortgages to purchasing equity in banks.

The hope is to encourage an unfreezing of the credit markets by a massive infusion of capital directly to the banks.This is a more direct recapitalization approach that removing bad mortgages from the bank balance sheets.

The stock markets responded quickly with a tremendous rebound, only to lose the gains because of economic reports that reveal a declining economy.

Bond markets had for the most part continued to decline, not attracting investors. Even the economic reports showing a low threat of inflation did not draw investors to bonds.

Until this afternoon, there was finally some new investment into the bond markets.

Hopefully, this will stabilize the mortgage interest rates and help draw them back down after their steady rise over the last several days.

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